I know this has been around for a long time, but I think this is a very elegant animation and description of the problems we face:
The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.
With the $700 billion here, $75 billion there numbers that we’ve been constantly bombarded with as consumers, eventually it all just sort of passes over us like “oh, that’s a lot o money,” without anyone real concern as to where the money is coming from and the potential ramifications of introducing said money into the economy. The source of all these bailouts, aid packages, stimulus, and so on is primarily funded by one thing: borrowing. Here’s what I found when perusing through the headlines today:
Mortgage Insider - Banking industry reports first loss in 18-plus years
Huffington Post - Citigroup-Government Stake Deal Could Come As Soon As Today: Wall Street Journal
Deal Journal - The Next Jamie Dimon and Sandy Weill: ‘Saint Ossie’ at UBS vs. Dougan at Credit Suisse
Calculated Risk - Obama Budget: $250 Billion for TARP II
Housing Wire - FDIC Completes Structured Sale of Toxic Assets
The American Institute of Certified Public Accountants issued a report last week saying don’t expect any improvement until 2010 at least: “any economic recovery will begin six months later than previously expected.” By contrast the National Association for Business Economics put out a report this week saying, “economic activity is expected to turn up in the second half of the year and 2010 is expected to see modestly above-trend growth of 3.1%.”
Hmmm, who to trust? Forecasters or bean counters? Which group would you let do your taxes? AICP has another advantage – the group’s name actually tells you what they do. “National Association for Business Economics”? Whiskey Tango Foxtrot is that?
Giving the CPAs further credibility – in a depressing way – is their reliance on what some would call facts: “Capital spending freezes have been put in place at nearly half of respondents’ companies, and 43 percent have had layoffs.”
The report is not entirely without optimism, though: “One glimmer of hope is that about a quarter of companies still expect some growth.” As Sudeep Reddy notes at the WSJ’s Real Time Economics blog, “Yes, only a quarter of firms expecting growth is what passes for hope these days.”
Constantine von Hoffman is a veteran business journalist and author of the blog CollateralDamage, a satirical look at marketing and business.
The Big Picture - Attack of the Zombies !
Housing Wire - Record Jump in Non-Agency Jumbo Prime Foreclosure Starts: Report
Mortgage Insider - House expected to pass mortgage ‘cramdown’ bill
Naked Capitalism - AIG Breakup LIkely
Mish’s Global Economic Trend Analysis - Bernanke’s Boiled Frog Plan To Recapitalize Banks